- As Apple circles in on a $2 trillion valuation, don't expect the gains to stop anytime soon, the Wedbush Securities analyst Daniel Ives said.
- In a note published on Sunday, Ives raised his Apple 12-month price target to $515 and its bullish-scenario price target to $600, representing upside potential of 16% and 35% from Friday's close.
- The increase in Apple's price target is predicated on a 5G "super cycle" that, according to Ives, is right around the corner.
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Apple is on the verge of becoming the first public company to reach a $2 trillion valuation — and when it does, don't expect the gains to stop, the Wedbush Securities analyst Daniel Ives said.
In a note published on Sunday, Ives said a 5G "super cycle" is right around the corner, with Apple having a "once in a decade" opportunity to capitalize on a massive upgrade cycle for its iPhone user base.
Apple is expected to launch the iPhone 12 in October. Wedbush said that according to Asia supply-chain checks it conducted, there has been a "discernible uptick in forecasts for iPhone 12" over the past week.
The research firm now expects only 5G models to be released this fall, with a cheaper 4G iPhone to be released in early 2021.
How important is the iPhone 12 to Apple? Ives said the new phone would represent "the most significant product cycle for Cook & Co. since iPhone 6 in 2014."
Ives estimated that roughly 350 million of Apple's nearly 1 billion worldwide iPhone users are due for an upgrade and that a new 5G iPhone could spur a lot of people to go through with an upgrade over the next 12 to 18 months.
Ives said that Wedbush believes that many on Wall Street "are underestimating the massive pent-up demand around this super cycle for Apple, which remains the opportunity for the bulls."
Ives raised his Apple 12-month price target to $515 from $475, representing upside potential of 16% from Friday's close. Additionally, Ives set a bull-case scenario price target of $600, representing upside potential of 35% from Friday's close.
The price targets are derived from a sum-of-the-parts valuation, with the services business commanding a valuation of $700 billion to $750 billion, Wedbush said.
Ives also highlighted the potential for Apple's wearables business, which has seen AirPod unit sales hit 65 million in 2019 and is estimated to hit 90 million unit sales this year, according to estimates from Wedbush.
Apple shares jumped 2%, to $453.28, in Monday morning trades. The company would need to hit $467.77 to reach a $2 trillion valuation.